Tuesday, May 15, 2012

Harp 3.0 Framework

Since 2009, the Congress, FHFA and the FHA have introduced and/or improved a
myriad of homeowner-friendly mortgage programs including the HARP refinance,
the FHA Streamline Refinance, the USDA Streamline Refinance and other
low-equity loan terms.
Just because the government creates a mortgage program, though, that doesn't
mean that mortgage banks will adopt it.
HARP 2.0 was an attempt to get additional mortgage lenders to participate in
the HARP mortgage program. Now, the White House is requesting a second
round of updates to Home Affordable Refinance Program.
It's the refinance program that would be known as HARP 3.0. The proposed
changes to HARP are sensible and would render millions more U.S. households
HARP-eligible.
A few of the proposed changes to HARP for HARP 3

Extend the HARP eligibility
date from May 31, 2009 to May 31, 2010

Require Fannie Mae and
Freddie Mac to remove barriers to competition among lenders by requiring
the same streamlined underwriting process for "new-servicer"
loans as "same-servicer" loans.

Eliminate employment and
income verification completely

Sanction second lien holders
which fail to subordinate to a HARP first mortgage

Sanction mortgage insurers
which refuse to transfer existing mortgage insurance coverage to a new
loan

Under the proposed terms for HARP 3, a HARP homeowner could, theoretically,
receive a pre-approved mortgage application by mail or secure email, which
would only require signatures for a final approval. The HARP mortgage approval
process would, truly, be a streamlined one.
HARP 3 is just in discussion phases now and, if it passes, its final form
may not resemble the loan described above.